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VW plays catch-up with two-tone compact SUV to challenge Nissan

[COMO, Italy] Volkswagen AG will roll out its smallest sport utility vehicle yet, offering optional flair like different colours for the roof and body, as the carmaker seeks to catch up with rivals in the fast-growing segment.

In addition to two-tone paint jobs, options include a fully digital cockpit display and 8-inch screens. 

Apple Inc's Beats Electronics LLC offers a 300-watt, 8-channel sound system tailored to the car's interior. The VW T-Roc, priced at about 20,000 euros (S$32,120), is set to reach European showrooms in November and then go on sale in almost all major markets worldwide.

The T-Roc, at 4.23m long, is roughly the size of Nissan Motor Co.'s popular Qashqai, but comes more than a decade later.

The compact SUV follows the introduction this year of the larger Atlas in the US and sister Teramont model in China. Overall, VW plans to bring out seven SUVs or crossovers by the end of 2018, with the expansion aimed at boosting profitability and burnishing its image two years after the diesel-cheating scandal erupted.

The compact T-Roc "embodies all good Volkswagen qualities and will give our SUV offensive added momentum," Herbert Diess, head of the VW nameplate, said Wednesday in a statement at the model's presentation at Lake Como, Italy.

Crowded Market The T-Roc is entering an increasingly crowded market and will compete with the Qashai, Renault SA's Captur and Toyota Motor Corp's recently introduced C-HR. Surging demand for SUVs has sparked interest from new manufacturers as well.

China's Chery Automobile Co is plotting inroads with a new compact model it will unveil at the Frankfurt auto show next month.

Volkswagen is betting that the T-Roc can still pay off despite its late arrival. To cut costs, the model will share components with Audi's Q2 crossover. Improving economies of scale and reining in excessive spending will be vital for the VW marque achieving a 4 per cent return on sales while investing in a range of electric cars planned to hit the market starting in 2020.

The T-Roc will initially be manufactured at VW's plant in Setubal, Portugal. A factory in Foshan, China, will produce a longer version.

Almost 80 per cent of compact SUVs are currently sold in Europe and China, while the models are "gaining in importance" in Brazil, India, Russia and the US, VW brand sales chief Juergen Stackmann said in the statement.

Volkswagen estimates that industrywide sales in the segment will surge 65 per cent in 10 years to 10.6 million vehicles.